Record fine for 7-Eleven underpaying workers and falsifying records

A 7-Eleven operator in Sydney has been fined $214,200 for underpaying two migrant employees and falsifying records, following legal action by the fair Work Ombudsman.

Operating the 7-Eleven at 354 Flushcombe Road in Blacktown, Harmandeep Singh Sarkaria has been penalised $35,700 and his company Amritsaria Four Pty Ltd has been penalised a further $178,500.

It is the largest penalty secured against a 7-Eleven franchisee since the national campaign to address systemic non-compliance began.

In his Federal Circuit Court judgment, Judge Justin Smith said Sarkaria had “deliberately flouted his legal obligations” and engaged in “a sustained and deliberate process of deception” aimed at maximising financial return.

“One of the aims of imposing a penalty is to mark a warning for others who might be tempted to engage in similar conduct,” Judge Smith said.

The underpayments are the result of the employees often being paid rates equivalent to $10 an hour while the falsified records made it seem they were paid $25. The two employees were entitled to receive normal hourly rates of more $22 an hour and up to $29.27 an hour for some weekend, public holiday and overtime shifts.

Judge Smith said that despite being “perfectly aware” of legal obligations relating to pay and record-keeping, Sarkaria had used records to “hide the fact that he was not paying two employees properly”.

“The contraventions were not accidental, but, rather part of a deliberate scheme aimed at maximising financial benefit to the respondents. In other words, this was part of the respondents’ business model,” Judge Smith said.

A warning to businesses

Fair Work Ombudsman, Natalie James, said that the Court’s decision sends a message that employers who set out to exploit workers face serious consequences.

“Anyone tempted to implement a business model that revolves around deliberate exploitation of workers should think again. This type of conduct has no place in Australian workplaces and will not be tolerated,” Ms James said.

Employers who underpay their workers risk face litigation, generally brought about by the Fair Work Ombudsman, which can result in orders of pay pay and monetary penalties.

In Australia, the most common of form wage underpayment occurs is through the payment of hourly rates which are less than the prescribed minimum pay rate. Often this can occur accidentally due to a misclassification under an Award and businesses should rectify the mistake quickly. Failure to pay overtime, penalties, loadings and allowances are also common errors.